Have you ever wondered how some owners can renovate rental units without making tenants move out? It sounds tricky, right? I used to think so too, until we explored this path and discovered how it could be done efficiently.
In today’s article, I’m diving into the benefits and strategies of renovating occupied rental units. This approach can revolutionize your business by accelerating revenue, minimizing downtime, and boosting your property’s profitability. Let’s break down why this skill is essential and how you can implement it in your real estate business.
The Challenges of Traditional Renovations
Traditional apartment renovations come with lots of challenges. Gathering materials, coordinating with labor, and sticking to budgets can be a nightmare. Often, the process is slow, and any delays can quickly blow through your timeline and budget.
Typically, your business plan hinges on increasing revenue as swiftly as possible, and waiting for a unit to be vacant before renovating can significantly slow you down.
Most owners follow a conventional approach: wait for tenants to move out, inspect the unit, hire a contractor, and then start renovations. This process can take 30 days or more, with plenty of opportunities for things to go wrong — contractor no-shows, material delays, and more.
Meanwhile, the unit sits vacant, generating no income.
The Benefits of Occupied Renovations
Renovating units while they’re still occupied can be a game-changer. Here’s why:
Minimizing Downtime
Let’s take a look at this scenario together:
Your tenant moves out so you take that opportunity to renovate the unit finally. That’ll take at least 30 days to find a contractor and get the ball rolling. That's a month of lost rent.
Now, imagine being able to renovate while the tenant is still living there. You have two options: the tenant renews at a higher rent, or they move out, and you perform a light turn to move in the next tenant within a week. This approach recoups nearly three weeks of lost revenue.
Accelerating Revenue
Think about the impact on a larger scale. If you have a 250-unit apartment complex, accelerating the renovation process can significantly boost your revenue. More units generating income faster means more cash flow and a higher return on your investment.
Cost Efficiency
By renovating while tenants are still in place, you can often avoid the more extensive (and expensive) renovations that come with a complete turnover. Simple updates to kitchens and bathrooms can justify rent increases without the need for full-scale renovations. Plus, you save on turn costs, as there’s no need for new flooring, paint, or other extensive repairs.
Implementing Occupied Renovations: Practical Tips
Finding the Right Team
To pull this off, you need a skilled construction manager who can lead the charge. We partnered with a top-notch construction manager to figure out the logistics of renovating occupied units. It can be a bit of a hassle — residents may need to move their belongings around—but the results are worth it.
Planning and Coordination
Our team at Nighthawk Equity can renovate an entire apartment in just three days while the tenant still lives there. We can handle up to 10 units at a time, allowing us to make rapid progress. This efficiency sets us apart from competitors who rely on the slower, traditional approach.
Streamlining Renovations
One major benefit is the cost savings. By focusing on key areas like kitchens and bathrooms, we can boost rents without a full-scale renovation. Tenants continue living in their units, avoiding the hassle of moving, and we avoid the costs associated with vacant units. When a tenant does move out, a quick light turn—perhaps just a new coat of paint or new flooring—is all that’s needed to prepare the unit for the next renter.
Conclusion
Occupied renovations are a powerful tool for real estate investors. They minimize downtime, accelerate revenue, and enhance property profitability. Implementing this approach can significantly boost your returns and set your business apart from the competition.
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Here’s to your real estate success!
